International research by Global House price Index indicated that in 2016 Ukraine was on the second place in the world by the drop of prices for homes (Brazil was #1). During 2017 home prices in Ukraine dropped further 2%, Finance.ua reports.
Experts believe home prices are unlikely to match the rate of economic growth, which is at about 1-2%.
One problem of the drop in prices for real estate in Ukraine is its high interest rates. Right now the interest rate to borrow money for a new home is over 20%.
This makes borrowing money to buy a place to live unfeasible. Ukrainian experts believe the interest rate should be at about 13-15% to make sense for locals to take a home loan from a bank.
At the same time, home loans are given for only up to 15 years.
For a person with the average salary (in June an average wage in Ukraine was around 7,000 hryvnia or USD $270), it would take 65 years to buy a 1-room apartment, if they were to save 10% of earnings.
Cities with the cheapest prices for apartments in Eastern European cities
The scheme below shows how long it would take a person on an average salary to collect money for a cheap home, if they were to save 10% of their earnings and buy the property for cash.
- Moscow: USD $100,000 (75 years)
- Kiev: $25,000 (65 years)
- Bucharest: $40,000 (47 years)
- Warsaw: $50,000 (34 years)
- Minsk: $30,000 (34 years)